How gambling money trickles down to you

Sunday

Sep 30, 2012 at 12:01 AM

For every dollar fed into a slot machine, about 90 percent is paid out as winnings. The balance — the net slots revenues — is taxed at a rate of 55 percent, the highest in the nation among states that don't own their own slot machines.

For every dollar fed into a slot machine, about 90 percent is paid out as winnings. The balance — the net slots revenues — is taxed at a rate of 55 percent, the highest in the nation among states that don't own their own slot machines.

Property tax relief is funded with 34 percent of all net slots revenues. Most, but not all, of these funds actually go to tax relief.

The state then applies a complicated formula based on income, market value, millage and local tax revenue from 2002 to 2005 to divide it up among the state's 499 school districts and Philadelphia. The formula does not take into account changes in the composition of a school district since that time.

It's similar to the "hold harmless" rule that married state tax school allocations to 1990 census figures and guarantees that slow-growing or contracting districts don't lose funding.

It also deprives growing counties like Monroe and Pike from its fair share of the gaming money.

Tim Eller of the Pennsylvania Department of Education said there was a reason for the gaming formula.

"The idea was to prevent potentially large fluctuations in each school district's distribution based on annual changes in the data elements," he said.

State Rep. Rosemary Brown, R-189, called them extremely complex and antiquated.

"We're looking at what those formulas would bring us now and see if it's hurting us," she said. "My guess is it's hurting us."

School districts, in turn, simply divide the pool of money they receive from the state by the number of approved homesteads and farmsteads in the school district. The result is the tax credit that shows up on your bill.

And here's something that may surprise you: Every property owner in a school district gets exactly the same amount of tax credit as their neighbors, regardless of the size of their property or appraised value. That's the way the 2004 law was written.